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Mr. HITCHCOCK. Twenty-five years in Bergen County.

Senator Watson. Are you connected with the building and loan association business?

Mr. HITCHCOCK. No, sir.
Senator WATSON. Or with a bank?
Mr. HITCHCOCK. No, sir.

Senator WATSON. Are you interested in the passage of this bill, or its defeat ?

Mr. HITCHCOCK. Well, I do not approve of the bill.
Senator WATSON. You do not?
Mr. HITCHCOCK. No, sir.
Senator WATSON. Tell us why.

Mr. HITCHCOCK. Well, I call your attention to an article published in the Herald Tribune of New York City on February 7, just past, which illustrates the population trend. It states:

The outstanding feature of the 1930 census is the drift to the suburbs. The cities continue to grow at the expense of rural communities, by the hybrid suburbs-neither urban nor rural-are growing at a phenomenal rate. New York gained 12.8 per cent, while her suburbs were growing at precisely the same rate as Chicago_63.1 per cent. Philadelphia gained 7.5 per cent, her suburbs, 38.8 per cent. St. Louis, 6.3 per cent, her suburbs, 55.4 per cent. Baltimore, 9.7 per cent, her suburbs, 63.5 per cent. In 1920 the drift was strongly toward the city.

In this case showing an unusual growth in the areas where home building under the proposed home loan bank, it seems to me, would procure the great portion of mortgages for refinancing. Still during these years mortgage money has always been obtainable during the past year, and at present plenty of first-mortgage money is available.

Senator TOWNSEND. Where?

Mr. HITCHCOCK. In Bergen County, N. J. I have made appraisals this year of over $2,000,000 worth of homes on which mortgages have been placed.

Senator WATSON. What is the main town in your county?

Mr. HITCHCOCK. Bergen County has 71 municipalities, and they run one into the other, and you can not tell where one leaves off and the other begins. The particular municipality in which I reside is Teaneck, and we have sold in that municipality 400 houses, and 100 houses were old houses, or foreclosed houses.

Senator WATSON. You say you have sold—who sold?

Mr. HITCHCOCK. The real estate fraternity in my neighborhood; not myself, I am sorry to say.

Senator WATSON. But the real estate people built those houses for sale!

Mr. HITCHCOCK. No; 25 or 30 individual builders built two or three or four buildings at a time.

Senator WATSON. Yes.

Mr. HITCHCOCK. There was no major operation in that 400-house building operation. And that building is going on to-day and mortgages are being placed to-day. Senator TOWNSEND. And your community is not overbuilt, in

your judgment ?

Mr. HITCHCOCK. No, sir. I might add, in that community there is a normal building program of approximately 250 to 300 homes, and that normal program is being maintained right at this particular time.

rial men,

Senator Watson. Have you building and loan associations there? Mr. HITCHCOCK. Yes, sir.

Senator WATSON. How many of them in your immediate neighborhood!

Mr. HITCHCOCK. I can not say how many, but there are many. The Newark building and loan associations, and the New York building and loan associations also cover this territory, in addition to the local associations.

Senator WATSON. How far are you from Newark?
Mr. HITCHCOCK. Five or six miles.
Senator Watson. You are right in that neighborhood?
Mr. HITCHCOCK. It lies between Newark and upper New York.

Senator WATSON. There is an abundance of money, then, to be obtained on mortgages to build homes?

Mr. HITCHCOCK. On first mortgages.
Senator WATSON. That is what I mean, first mortgage money.
Mr. HITCHCOCK. Yes, I find it so.

As to huddling, there are now empty homes all over the countryall evidence submitted proves that. If these families could pay interest and taxes they would not be cutting their carrying charges by doubling up. It is not for lack of desire for homes; it is for lack of income.

As for junior financing, I can not see that a 50 per cent mortgage is any help. That, it seems to me, must be furnished by basic mate

and the seller of the land, in the same manner as automobile purchase notes or contracts are discounted by the manufacturing companies or their subsidiaries; that is, such junior mortgage financing is to be financed to net the purchaser a fixed return on his or its money, not as at present, to take all the traffic will bear. There is a condition that I know exists, but I do not see where this bill is going to help it a bit.

Not one building and loan association in New Jersey failed, in 1931, out of over eleven hundred.

My conclusion is that when more and better houses are needed the builders will be on their toes to build them and that the banks will again be glad to lend the building and loan associations more money than is contemplated under the proposed bill, if needed, to finance them.

Senator WATSON. Are you a contractor?
Mr. HITCHCOCK. I have done plenty of contracting. Not now, no.
Senator WATSON. Not as a home builder yourself?

Mr. HITCHCOCK. No. I have handled several developments of land, one of nearly a thousand acres in which, from 1923 to date, we have built from farm land to a town of over 8,000, and we never lacked for mortgage money.

Senator Watson. You have had plenty of money, and have now?
Mr. HITCHCOCK. Yes; first-mortgage money.
Senator WATSON. Yes; that is what we call mortgage money.
Mr. HITCHCOCK. Yes, sir.

Senator Watson. We thank you very much, Mr. Hitchcock. Mr. C. S. Cannon.

STATEMENT OF F. S. CANNON, PRESIDENT OF THE RAILROAD

MEN'S BUILDING AND SAVINGS ASSOCIATION, INDIANAPOLIS, IND.

Senator Watson. Mr. Cannon, will you tell the committee your name?

Mr. CANNON. F. S. Cannon.
Senator Watson. Where do you live, Mr. Cannon?
Mr. Cannon. Indianapolis, Ind.
Senator Watson. What is your business?

Mr. CANNON. I am president of the Railroad Men's Building and Savings Association of Indianapolis.

Senator WATSON. How old a concern is that?

Mr. CANNON. That concern is 45 years old, having been organized in 1888.

Senator Watson. How long have you been connected with it?

Mr. CANNON. I have been connected with it for eight years, as director and vice president, and now president.

Senator WATSON. What does that building and savings association do? What is its business?

Mr. CANNON. We make first mortgage loans on improved property in Marion County only.

Senator Watson. That is in Indianapolis ?
Mr. CANNON. Yes, sir.
Senator WATSON. I notice here it says, Railroad men."

Mr. CANNON. That derived its name, Senator, from the fact that the organizers of the association and the first officers were in the railroad service.

Senator WATSON. Yes.
Mr. CANNON. That is just a tradition of the past.

Senator Watson. You do a building and loan business exclusively, do you? Mr. CANNON. Strictly, yes.

Senator WATSON. I notice this says “ Railroad Building and Savings Associations.” Is that a correct name?

Mr. CANNON. It should be, under the law, a building and loan association, yes.

Senator WATSON. You take direct deposits ?
Mr. CANNON. No; we do not.
Senator WATSON. You do not?
Mr. CANNON. No, sir.
Senator WATSON. You do not do a banking business?
Mr. CANNON. No; we do not.
Senator Watson. You do not have money on demand?
Mr. CANNON. No, sir.
Senator Watson. It is a sort of a building and loan proposition?
Mr. CANNON. Yes; we operate under that law.
Senator Watson. How many loans have you at the present time?
Mr. CANNON. In the city?
Senator WATSON. In the association ?
Mr. CANNON. We have 26,000 loans.
Senator WATSON. Twenty-six thousand ?
Mr. CANNON. Yes, sir.

Senator WATSON. Now, tell us the general condition of those loans. What is the situation?

Mr. CANNON. Out of the 26,000 loans which we have, I would say that 18 per cent of them were in arrears. Now out of that amount

Senator WATSON (interposing). Now, let me ask you there, please, this: In arrears how far?

Mr. CANNON. Three months, or more.

Senator WATSON. When it is three months or more in arrears you call it in arrears?

Mr. CANNON. Yes, sir.

Senator WATSON. Now, go on with your statement. I interrupted you.

Mr. ČANNON. Now, out of that total we find that we have about 10

per cent that are really in need of help. That is, they are in a serious condition.

Senator Watson. Are you now in a condition to help them?

Mr. CANNON. We sometimes can help them by making what we call a renewal loan. One gentleman who preceded me described the process of that loan, and we do the same thing, where it is possible to reduce payments, so that they can be carried by easier payments.

Senator WATSON. What is the cause of these defaults, Mr. Cannon?

Mr. CANNON. We discover principally that it is because they have been unable to make money.

Senator Watson. Out of employment?
Mr. CANNON. Yes, sir.

Senator Watson. What is the character of the people, generally, to whom you make these loans ? Take the loans in the city of Indianapolis.

Mr. CANNON. We have a diversification, Senator. It is a railroad center, with a great many railroad men. But we have many small manufacturing companies. The railroads, you know what shape they are in. And the small manufacturing companies are operating only part of the time. That situation shows itself in our association. There is a group that does not seem to be affected by that economic situation to which I have referred. They are the ones that are employed in offices. Indianapolis is a distributing center. It is comparable to Atlanta in the South. And we have many loans placed with employees of companies that are nation-wide in distribution. That class is not affected materially.

Senator Watson. They are keeping up their payments ?
Mr. CANNON. Yes, sir.
Senator WATSON. You have a form of stock in your association ?
Mr. CANNON. Yes, sir.
Senator WATSON. Is that taxable?

Mr. CANNON. Not that I know of, except that it is declared personally.

Senator WATSON. If it was, I suppose you would have found it out. Now, you have hitherto had no trouble, until two years ago!

Mr. CANNON. That is when the trouble began to materialize.

Senator WATSON. You had trouble then refinancing your operations?

Mr. CANNON. Yes, sir.

Senator WATSON. Can you now go to the banks and borrow money for the purpose of helping these people who are in default?

Mr. CANNON. I think we could, to a reasonable extent. We have a limitation on that which would make it impossible, I think, for us to function to a very large extent in the way we could do at the present time if we had some other way of getting money.

Senator WATSON. Up to two years ago you had no trouble in getting money?

Mr. Cannon. In the banks of Indianapolis, no, Senator; and the banks up to the present time have been very accommodating.

Senator Watson. Letting you have the money?
Mr. Cannon. Yes, sir.

Senator WATSON. Have you kept up your payments with the banks when due?

Mr. CANNON. Yes, sir.
Senator WATSON. You have had no trouble in that regard?
Mr. CANNON. No, sir.

Senator WATSON. You have studied this bill, have you, Mr. Cannon?

Mr. CANNON. Yes, sir.
Senator WATSON. You are more or less familiar with it?
Mr. CANNON. Yes, sir.
Senator Watson. What is your opinion of it?

Mr. CANNON. Well, I look at it in two ways. The first is to meet this emergency, and it is my point of view that it meets this emergency. All the testimony that I have listened to for the last two days has just emphasized more clearly, in view of my own knowledge of the situation, the necessity of doing something to meet this situation we find ourselves facing. And, secondly,

Senator WATSON (interposing). Suppose we do not pass this bill, or something akin to it, what then?

Mr. CANNON. Well, Í am not a prophet, and I hate to prophesy what will happen if something is not done. I feel that something must be done, because, dealing with these people day in and day out, it seems to me that we have before us the most difficult problem that the financial world has faced.

Senator WATSON. Have you studied the provisions of the bill that we passed a few weeks ago creating the Reconstruction Finance Corporation, of which General Dawes is the head?

Mr. CANNON. I am not very familiar with the bill.

Senator Watson. Do you know whether there is any provision in there which would help this situation?

Mr. Cannon. Not definitely, Senator. I understand there is a possibility that some help might be given.

Senator Watson. Now, you go on with your statement. I interrupted you. You were about to give some reasons, and you gave one reason.

Mr. CANNON. I gave the first reason.
Senator WATSON. Yes.
Mr. CANNON. That is, to meet the present emergency.
Senator WATSON. Yes.

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